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Chairman's Statement

Extracted from Annual Report 2016

On behalf of the Board of Directors of Jaya Tiasa Holdings Berhad, I
am pleased to present to you the Annual Report and Audited Financial
Statement of the Group for the Financial Year Ended 30 June 2016.

ECONOMY OVERVIEW

It has been a rather challenging year for the global economy.
Rising international debt, dramatic fall in oil prices and
lower than expected GDP growth heightened fears that
the world is settling into a mediocre of slow growth. Euro
zone exhibited unspectacular growth and the impact from
Brexit remain uncertain while emerging markets like China
and India are managing healthy growth despite slowdown
in their economy. According to IMF, the sluggish advanced
industrialized economies are expected to gain small GDP
growth in the coming year.

On the domestic front, Malaysian Ringgit remains weak. The
sharp downturn in oil prices, threat of rate hike in the US and
political risks have added concerns to the nation. Overall,
Malaysia economy is relatively stable with the government
strenuously committed to fiscal reform despite still being far
from achieving a balanced budget.

GROUP PERFORMANCE

Our Group has also a mixed performance in FY2016. Timber
division outperformed by contributing 61% and 119% of the
group's revenue and profit before tax respectively. The profit
before tax increased significantly by 31% despite 15% drop
in revenue. Log price manage to sustain due to the tight
supply and the favorable exchange rate contributed to the
better performance.

Comparing to last Financial Year, our loss in oil palm division
has narrowed to RM17.2 million. Crude Palm Oil (CPO) price
increased by 4.1% to RM2,255 per Metric Tonnes (MT) while
fresh fruit bunches (FFB) price increased by 4.4% to RM417
per MT. FFB productions increased significantly by 26% to
931,745MT. The loss was mainly due to high field input cost.

FINANCIAL PERFORMANCE

We closed the year with revenue of RM1,023 million, a slight
1% drop from last year primarily due to lower sales volume
from timber division. Profit before tax increased by 56%
to RM82 million and net profit was RM57 million, a 65%
increase. Earning per share rose to 5.60 sen from 3.27 sen
recorded last financial year. Shareholders' fund improved to
RM1,814 millions compared to RM1,769 million achieved for
the preceding financial year. Net tangible assets per share
stood at RM1.81 for the year ended 30 June 2016.

DIVIDEND

To enhance shareholders' return, the Board of Directors
has maintained its dividend policy of paying out not less
than 20% of its net profit, subject to not compromising the
Group's ability to support its pursuit for long term growth.
The Board of Directors has recommended a first and final
single-tier dividend of 1.3 sen per share representing about
22% of after tax profit in respect of the Financial Year
Ended 30 June 2016 for approval by the shareholders at
the forthcoming Annual General Meeting to be held on 24
November 2016.

REVIEW OF OPERATION

Logging

The logging division contributed about 27% of the total
Group's revenue. Dry weather and low water level continued
to impede the transportation of logs for processing mills
and exports. Average export price for logs remained strong,
hovering around USD220 per cubic metre (m3) largely due
to the tightening log supply and the continuing sustained
demand from India. More stringent controls by government
also help to stabilize log prices.

As mentioned, India remained the largest log export market
for the group for consecutive years with sales accounting
for 72% of the Group's total log export sales in US Dollars.
Demand from the country remains robust despite the
challenging economy and competition from other regions.

Logging Outlook and Strategy

We foresee the market demand for tropical logs to remain
robust despite the slow global growth. The Group will
continue to export logs in the coming financial year at prices
that are likely to be sustained due to supply constraint.

To better manage our forest, we will select species with
higher value for harvesting and maintain vigilant controls
on the cost of production. Increased attention will also be
given to logistical planning to ensure that logs extracted are
delivered within the shortest time frame possible to preserve
their freshness and maintain their quality for premium prices.

Plywood

In FY2016, the plywood division contributed about 23%
to the total revenue of the Group. Plywood sales volumes
decreased by 25% YoY, while the average selling prices
decreased by 12%. The market conditions remain
challenging. To maximize our revenue and profit as well as
to maintain our existing markets, we maintained our strategy
in producing more high value products.

During the year, South Korea continued as our largest export
destinations, accounting for 42% of total plywood exports
of the group in US Dollar terms. The reduced anti-dumping
duty rate from previous 6.43% to current 3.08% has worked
us favor. Other major exports markets were China / Hong
Kong, Taiwan and Japan.

Plywood Outlook and Strategy

Demand for plywood is expected to stabilize at current level
in our key markets namely South Korea, Taiwan, China /
Hong Kong and Japan.

The group will adopt a dynamic strategic approach in an
increasingly competitive global environment, taking into
account the scarcity of resources, the volatility of foreign
exchange rates and volatile crude oil prices. The group will
strengthen its current measures to maintain and enhance its
competitive edge, and these include harnessing its existing
production technology towards improving operational
efficiency and product quality, and being innovative in
producing more value-added products for niche markets
to enhance margins.

Oil Palm

The division was affected by the unexpected poor
performance in third quarter during the year under review.
Nonetheless, we managed to narrow the pre-tax loss to
RM17.2 million, from the RM21.5 million losses reported in
previous year. Revenue for the year was RM396 million, a
33% increase compared to previous year.

As at 30 June 2016, the group's planted areas stood at
69,587 hectares (Ha) spreading over 10 plantations in
Sarawak. Our matured area increased slightly to 60,787 Ha,
a 3% increase. FFB production for the year had increased
significantly by 26% to 931,745 MT from the previous year's
740,013 MT as 54% of our trees have reached their prime
age.

The group's palm oil mill produced approximately 120,000
MT of CPO and 21,000 MT of palm kernel (PK). There are
currently three mills in operation with total processing
capacity of 210 MT per hour, while another mill with designed
capacity of 60 MT is scheduled to be commissioned by the
end of Year 2016. Upon full operation, the mills are expected
to contribute significantly to profitability.

Oil Palm Outlook and Strategy

As at 30 June 2016, the weighted average of our palm age
is just above 7 years. We expect our FFB yield (MT) per
hectare to continue to improve and consequently reducing
our cost of production. Labor shortage will continue to be
a plantation issue nationwide and we are no exception. In
order to cope with this challenging operating environment,
we have increased mechanization so we can optimize the
deployment of labor.

We will continue to improve our Oil Extraction Rate (OER)
from CPO mills by imposing stringent control over operation
efficiency and FFB input quality. With further fine tuning, we
expect production volume and efficiency to improve in next
financial year.

We remain optimistic about the long term prospects for
the palm oil industry despite current weakness in CPO
price. We will endeavor to lower our cost of production by
enhancing our harvesting yield and productivity so that we
are poised to reap the profits in the event CPO prices start
to trend upwards.

Reforestation

We are progressively planting in our reforestation areas with
fast-growing tree species such as Eucalyptus Deglupta
(Kamarere), Eucalyptus Pellita and Kelampayan planted
across the plantation areas, the group's forest planted area
has been expanding and will continue to trend up steadily.

Reforestation Outlook and Strategy

We are committed to plant forest in line with State
Governments commitment on forest sustainability and
the world's move towards conservation of natural forests.
The division is not expected to contribute to earnings
in the short term given that the planted forest has a
gestation period of 12 to 15 years before it can be ready
for commercial harvesting. The challenge of the group is to
improvise silvicultural practices and place greater emphasis
on stringent quality control over new plantings and its
maintenance so as to improve the survival rate and optimum
growth of planted trees.

GOING FORWARD

The International Monetary Fund (IMF) expects the global
economy to see tepid growth and cuts its forecast this
year and next to 3.4% due to Brexit which creates a wave
of uncertainty amid already fragile business and consumer
confidence. Malaysian economy's performance is expected
to be modest and gradual.

Prices for timber products especially logs are expected
to remain firm in view of restricted supply and the stable
demand from importing countries. We are optimistic that
FY2017 will continue to be a profitable year for the timber
division.

FFB yield will continue to improve as more palm trees are
reaching their prime. Better utilization resulting from higher
FFB production and with additional CPO mill will boost
our CPO production while expanding vertical integration
should contribute positively to the palm oil division in the
next financial year.

Appreciation

The Group is prepared to embrace changes in tandem with
the global and local economic demands and challenges. We
have in place a clear strategy, focus on uplifting operations
to deliver productivity and growth.

On behalf of the board, I wish to convey our sincere thanks
to my management team and all employees of the Group for
their undivided support commitment and dedication to the
Group. I would also like to extend my gratitude to you, our
shareholders, customers, business partners, bankers and
the relevant authorities and members of the community for
your invaluable support and unwavering trust in the Group.